Microsoft has solidified its prominent position in the tech world by signing a colossal $9.7 billion contract with IREN, a leading artificial intelligence cloud service provider. This strategic alliance will grant Microsoft access to some of Nvidia’s advanced chips, bolstering its cloud services capabilities.

The contract, spanning five years and including a 20% prepayment, is a significant step for Microsoft as it strives to keep pace with the surging demand for AI technologies. This move comes on the heels of Microsoft’s impressive quarterly financial performance, where it reported an 18% increase in sales, reaching $77.7 billion. The results exceeded Wall Street’s expectations and highlighted the company’s substantial investments aimed at expanding its cloud computing infrastructure to meet the growing appetite for AI tools.

In the July-September quarter alone, Microsoft dedicated nearly $35 billion to capital expenditures focused on AI and cloud services. A significant portion of this spending was channeled into acquiring computer chips, with the remainder allocated to developing data center real estate.

Jonathan Tinter, Microsoft’s president of business development and ventures, emphasized the importance of the collaboration, stating, “IREN’s expertise in building and operating a fully integrated AI cloud — from data centers to GPU stack — combined with their secured power capacity makes them a strategic partner. This collaboration unlocks new growth opportunities for both companies and the customers we serve.”

In tandem with the IREN agreement, Microsoft recently announced a renewed partnership with OpenAI, which has momentarily elevated its market valuation to an astounding $4 trillion for the second time this year. This new deal affords Microsoft approximately a 27% stake in OpenAI’s newly formed for-profit entity, positioning it slightly ahead of the OpenAI nonprofit’s 26% stake. This strategic move underscores Microsoft’s unwavering commitment to fortifying its position at the forefront of AI innovation.

IREN also said Monday that it signed a deal with Dell Technologies to buy the chips and ancillary equipment for about $5.8 billion. The Australian company anticipates the chips being deployed in phases through next year at its Childress, Texas campus.

Shares of IREN jumped 22% before the opening bell in the U.S. Shares of Microsoft rose slightly,.